February 16, Wednesday

An SPJ activist at the Star-Bulletin phoned a friend at the San Francisco Examiner today, and learned that saving the paper was not necessarily good news for employees, and the announcement of unnamed bidders was cause for more alarm and turmoil in their newsroom. Although it sounded like good news to us, it simply introduced whole new levels of fear for them. Who are the bidders? Do they have reputations as good employers or bad? What kinds of news operations do they run? Will the buyer honor the union contracts? Will there be layoffs? The questions and uncertainties are certainly familiar ones to us. There are obviously no simple solutions to this corporate assault on the news business.

February 17, Thursday

 

Alert: Honolulu's KITV News reported tonight that movement toward a possible settlement continues, possibly including a proposal to restore certain assets and offer the Star-Bulletin for sale. Relying on anonymous sources, KITV said Magistrate Judge Kurren is pressing for a reasonable package. I'm not clear whether this would involve a restructuring of the existing JOA, or some proposal for ending the JOA and spinning off the Star-Bulletin. As of early evening Honolulu time, transcripts of the news broadcast had not yet appeared on the KITV web site.

 

Our fight to save the Star-Bulletin is just the latest skirmish in an ongoing, industrywide legal, political, and social struggle between the owners of JOA newspapers, the unions representing their employees, and the communities in which they operate, antitrust attorney Don Baker explained last weekend in an exclusive interview. The sides faced off in Detroit, and tangled again as JOA's were terminated or threatened to terminate in Chattanooga, Seattle and San Francisco, and now in Honolulu. Ultimately newspapers are just a part of the broader fight for position, power and control within the rapidly consolidating corporate structure of the communications industry. Baker said the key legal issue in the Star-Bulletin case is that the Newspaper Preservation Act, which exempts joint business operations from antitrust scrutiny, "does not protect an agreement that eliminates or is likely to eliminate one of the papers in the JOA." "Whatever else comes out of this, that's what we hope to win," Baker said.

---

The Honolulu announcement (that Gannett and Liberty Newspapers would close the Star-Bulletin) was very important in the overall scheme of things," Baker said.

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Baker said his firm has worked with several different unions and citizens' groups on JOA issues beginning with Detroit, when Larry Gold, an old friend and law school classmate who was then General Counsel for the AFL-CIO, called for help.

In Detroit, Gannett and Knight Ridder had amended the JOA without Justice Department approval to allow the two newspapers to publish a joint edition during the bitter strike. Baker petitioned the Attorney General asking her to reopen the proceedings.

"We never heard anything," Baker said, but the joint strike edition was dropped. A lawsuit ultimately filed to challenge the JOA amendment was eventually dismissed as moot by an appeals court without reaching the merits of the case.

"Since then we had been looking at a number of situations--Chattanooga, Seattle, San Francisco. The Honolulu announcement (that Gannett and Liberty Newspapers would close the Star-Bulletin) was very important in the overall scheme of things," Baker said.

"In Chattanooga, the parties had just shut the paper down and DOJ took no action. But in Seattle, they were amending the JOA in such a way that the P-I gets almost as much if it doesn't publish as if it does; and almost any fool won't publish. And San Francisco was different, the papers were doing a better job of going through the motions of trying to sell the paper."

"Then you suddenly get the Honolulu case where Gannett just plain bare faced planned to shut 'em down and pay 'em off. From that point, it was clear that the Justice Department became quite interested," Baker said.

[More from this interview tomorrow.]

• • • •

I stumbled into the interview with Baker by accident.

After I mistakenly reported last week that Washington D.C. attorney Todd Miller was flying to Honolulu to appear in the settlement conference on behalf of the Save Our Star-Bulletin plaintiffs, Miller contacted me to say his partner, Don Baker, would be making the trip.

With Miller's e-mail address in hand, I was able to make a plea for an interview, which was relayed to Baker on his arrival in Honolulu.

I got a message from Baker early Saturday morning. He was happy to meet, but was scheduled to fly back that same night. I remained "on call" all day, and at 4 p.m. he called back. The settlement conference had just finished, he was booked for dinner with some of his clients at 6 p.m., but he was available until then.

The problem was that I was at home in Kaaawa, at least 40 minutes away. I grabbed camera, recorder, and notebook and flew out the door, heading for the Executive Center Hotel in the center of the downtown business district.

Baker's ground rules were simple. He would not comment, directly or indirectly, on any aspect of the settlement conference. He explained that he is "very sensitive" to Magistrate Judge Kurren's directive to avoid comment. But with that exception, he was open, direct, and very informative in discussing the background and importance of the legal and political battleground that surrounds the Star-Bulletin's fight for survival.

 

February 18, Friday

During our relatively brief conversation, Don Baker, who served as Assistant Attorney General in Charge of the Antitrust Division during the Carter Administration, said there has been a major change in the way the Dept. of Justice views joint operating agreements formed under provisions of the Newspaper Preservation Act.

The newspapers have traditionally argued that a JOA creates a "single economic entity" which, by definition, eliminates all competition between the JOA partners. This has been the argument advanced by Gannett/Liberty Newspapers throughout this case. For example, in their appeal to the 9th Circuit:

"Furthermore, even under the purported "market" the State alleges, the Amendment cannot harm competition for a simple reason: there is no economic competition between the Advertiser and the Star-Bulletin now. All such competition ended more than 37 years ago when the JOA was formed. Under the JOA, the Advertiser and Star-Bulletin are and have been a single economic entity. The Advertiser, as general partner of HNA, has the responsibility to "control, supervise, manage and perform all operations (other than the news and editorial operations of Advertiser and Star-Bulletin) involved in producing, printing, selling and distributing the Newspapers" -- including, among other things, fixing ad rates, setting newspaper prices, selling ads, promotion, and distribution. ER 8, Bernius Decl., Exh. B at 11-15. Ending the JOA cannot eliminate competition, because the Star-Bulletin and the Advertiser have not competed since 1962."

Baker said the unions have put forward a different view: "We were arguing that they were a single economic entity for some purposes, like dealing with subscribers and advertisers, but that they weren't a single economic entity for acquiring content and acquiring the creators of content. We argued the competition for content and content creators was sufficient to evoke normal antitrust principles, and was entirely consistent with the policy of the Newspaper Preservation Act of persuading competing newspaper voices."

"In the last 14 months since Chattanooga, the Justice Department seems to have come around to actually accepting our argument against the expansive "single economic entity" theory," Baker said. "The Department's 9th Circuit Court of Appeals brief publicly accepted that point and so was very, very, very important."

I've been under the impression that the 1993 amendments to the Honolulu JOA, which essentially stripped the Star-Bulletin of any production assets and any proportional share of the JOA profits, had been previously approved by the Justice Department. Baker explained why that is not the case.

"The DOJ never approved the 1993 amendment to the Honolulu JOA. As you know, you've got the two categories of JOAs. Amendments to the grandfathered ones (like Honolulu) are, under the statute, exempt unless they add additional parties. The post-1970 JOAs must be approved by the Attorney General and hence amendments to them are different. So the Justice Department would have said in 1993 that they had no approval function on the Honolulu JOA and didn't approve the new Gannett deal with Liberty."

This raises the potential that the Justice Department could enter our case, at some point, and force a review of the existing JOA along with its heavily one-sided distribution of power and interests that put Gannett in complete control.

"Gannett may have just arrogantly stumbled into this situation," Baker observed. "It seems to me entirely plausible to conclude that they really did think the 1970 statute (the Newspaper Preservation Act) was The Newspaper Owners' Outdoor Relief Act and there was nothing that we or anybody else could or would do. And they were genuinely shocked and surprised that the State sued, although they might have been less surprised that we sued. And I'm sure they were surprised that the Justice Department waded in with the amicus brief in the 9th Circuit."

Gannett executives have been seen in their offices upstairs working late into the night this week, adding fuel to speculation that some legal "deal" could be in the works, perhaps, as in San Francisco, pushed by behind-the-scenes pressure from the Justice Department. If there are such moves afoot, they can't remain confidential for long.

 February 19, Saturday

 The five-month anniversary of the September 16 announcement that the Star-Bulletin would be shut down passed quietly this week without mention in the newsroom. Our survival to date is so extraordinary that somehow the date just slipped by. Another week, another small victory for journalism over Gannett.

Another milestone came at the beginning of the week when Trini Peltier (remember her?) marked her 45th anniversary of Star-Bulletin employment. Trini modestly says that Bud Smyser joined the paper 55 years ago, making a century of newspaper history between them.

Meanwhile, it's time to enjoy the weekend. I'll try to emulate Mr. Silverman, another stray who has partially joined our household. He appears to know how to make the most of the moment, and I hope to follow his lead a bit over the next 24 hours.

 

February 20, Sunday

I just ran across this 1998 story about the unsuccessful attempt by the Newspaper Guild to draw the Department of Justice into the Chattanooga JOA fight. It mentions the petition prepared by Don Baker for the Guild, which helped set the state for the challenge to the planned closure of the Star-Bulletin.

It suddenly hit me. The Star-Bulletin hasn't been the victim of a series of unrelated problems, incremental decisions, and ill-conceived initiatives. Since 1993, if not before, we've been the underside of Gannett's planned transition and launch of a "new" flagship product. For them, it was just a marketing problem: How to take the "old" product and gradually move it off the shelves while weaning existing consumers off it's delights, and at the same time "reposition" your flagship product to reemerge as everybody's favorite. These things take time to accomplish. When you move too quickly, things can go badly. Remember "New Coke"?

So you slowly erode the brand loyalty of fans devoted to the "old" product by making it a little harder to get, delaying deliveries, reducing shelf space devoted to it, cutting back on advertising and promotion, etc., and hope there will be a natural attrition.

Then, when all is in place, bingo. Pull the old product from the shelves, push the new or repositioned flagship product forward with a splash of advertising and marketing, and it's done with a minimum of fuss.

Since Gannett has in practice believed that they controlled both newspapers and needed to phase out one of them, and gave no thought to the antitrust implications of their actions, they would naturally be planning and orchestrating this transition from a two-product to a one-product line. It would be bad business if they didn't, and one thing Gannett is good at is business.

We got an apparent "customer satisfaction" call the other day at home, asking whether we get the Advertiser or Star-Bulletin, and whether we received the paper on time or if there were other problems. I complained about no longer receiving the Star-Bulletin's final edition, which was delivered here regularly until the most recent series of press delays. Might as well make the point whenever I can.

 

February 21, Monday

Another reminder of our situation came late Friday, when a brief exchange of newsroom messages acknowledged the departure of Paul Carvalho, who walks across the divide and begins a new job at Gannett's Advertiser. Only the messages remained on Monday morning.

To all: "Come to the city desk for some treats to celebrate our appreciation for tall Paul Carvalho..who's leaving our ranks, but not our circle of friendship.

And, to all from Paul:
"To all the Bulletin Stars. Keep shining. You're the greatest. Paul C."

And then he was gone.

A Chicago Tribune story on Sunday analyzed the decision of the Thomsom Corp. to sell off most of its chain of more than 130 newspapers in the U.S. and Canada. The story, by Tribune media writer Tim Jones, is a particularly insightful look at disturbing trends in the profitable newspaper industry. Jones quickly gets to the key questions, which certainly resonate for those of us living through this phase of Star-Bulletin history:

Perhaps most important, Thomson is the first major newspaper publisher to so enthusiastically embrace electronic delivery of information while jettisoning high-profit daily newspapers.

The question on the minds of some industry analysts is obvious: What does this mean for the future of newspapers? And when these papers are sold, will they be bought by companies more interested in high profit margins than high-quality journalism?

It's a must read. Take a minute and do it.

It was slow in the newsroom during yesterday's holiday, with government offices of all kinds closed and most people enjoying the Hawaiian winter weather, meaning sun. Meanwhile, though, the lull seemed to encourage more rambling conversations that bounced back and forth between assessments of the future of the San Francisco Examiner, possible outcomes of settlement talks here, and the overall implications for ourselves and the Star-Bulletin. We're searching for news of the bidders for the Examiner, but there's not much out there. Lots of theories of how that situation impacts us, but the ground is constantly shifting.

 

February 22, Tuesday

Still no developments on the home front. The "usual sources" have been dry wells. Settlement talks, if they are proceeding, have been unusually successful in maintaining confidentiality. A status conference is scheduled for tomorrow in federal court, which could yield some indirect clues.

It feels very strange to be the object of someone else's negotiations, and among those most directly impacted by whatever is eventually agreed upon, but with no direct access to the discussions. Admittedly, those of us in the newsroom won't count our losses in the millions, as Gannett and Rupert Phillips might describe their own risks, but I'm certain our proportional impacts are greater than either of our conglomerate owners. We potentially lose our employment and, for some, our professions if this newspaper closes. Gannett and Rupert bounce their rates of return up or down a modest amount. There's something wrong with a system that values that incremental bounce at a far higher level than our potential losses.

 

February 23, Wednesday

It was all anticipation and no action again in federal court today as attorneys huddled with the judge to reschedule several deadlines, which were pushed back by mutual agreement. A brief story made it into our second edition, simply saying that there was no discussion of the settlement talks and attorneys would not comment.

Several staffers have said they are extremely encouraged by the direction the case is taking, and believe that any negotiated settlement will be substantially in our favor. But I'm having trouble seeing how the eggs can be unscrambled in a way that would be an acceptable alternative to going to trial for all of those involved.

Will Gannett be willing to walk away from the savings they've been salivating over, which would be achieved by eliminating the Star-Bulletin as a partner and competitor? Under normal conditions, I would say, "No way!". But you have to wonder what Gannett officials believe Rupert will say if or when he is questioned under oath by opposing attorneys. They have to be worried that he will tell the truth and describe elements of what might, in hindsight, be seen as an illegal conspiracy even if at the time it just seemed to be good, hard business sense. And, after Rupert, what will others in our management have to say? It could be hard to contain the damage from even this first round of discovery, especially since the record could provide signposts for Dept. of Justice investigators. This is a level of uncertainty that has to be giving Gannett lawyers some sleepless nights.

 

February 24, Thursday

[Written after the fact, due to technical ineptitude...]

"Gone to Kona." That's what Thursday's update was supposed to say, but my fine plan to update from the Kona Surf hotel via my Palm III failed. I should have done a test to be sure that I knew what I was doing. Apparently I didn't. But at least the silence wasn't due to new and disastrous happenings back at the Star-Bulletin.

In this case, no news meant I'm in Kona for a couple of days.

Mainly this is a brief bit of relaxing while my wife is conferencing. Right now, I'm sitting in a room at the Kona Surf hotel, looking in one direction along the coastline to the north, where the land slopes down from the immense volcanic mountains and meets a very calm ocean. It really is an amazing bit of the world, and almost enough to press the Star-Bulletin/Gannett worries well into the background.

February 25, Friday

I have not seen a Star-Bulletin since leaving Honolulu yesterday morning. To be honest, I haven't seen an Advertiser either, although I've seen a couple of empty Advertiser boxes.

We stopped in a supermarket in Kailua-Kona, a few miles up the road. You could pick up a copy of West Hawaii Today, the local paper, as well as a Wall Street Journal, or an L.A. Times, but no Star-Bulletins or Advertisers could be found. At least not at noon.

We finally ran across both Honolulu papers Friday afternoon. I probably can't claim to have found the "elephants' graveyard" of missing Star-Bulletin sales racks, but there were a bunch of familiar ones lined up outside the KCA Supermarket in the Keauhou Shopping Center in Kona. Here you can see the Advertiser, second from left, in the box complete with the Star-Bulletin's "We Make Waves" banner. Also being sold from our familiar blue racks were the Hilo Tribune Herald and USA Today, along with the Star-Bulletin (far left).

 

February 26, Saturday

We arrived early in the morning at what is pretentiously named the Kona International Airport for our return flight to Honolulu.

There were lots of newspapers available at the news stand. You could choose from the New York Times, San Francisco Chronicle, Investors' Daily, Financial Times, USA Today, a Japanese language newspaper that I didn't recognize, Wall Street Journal, and the Honolulu Advertiser, but no Star-Bulletin. Most businesses would define this as a failed distribution effort, fire those involved, and come up with a better distribution strategy. The fact that we haven't is weighty evidence that Gannett assumed monopoly control and targeted us for extinction years ago.

There were plenty of local, national and international newspapers at the Kona airport, but no Star-Bulletin.

February 27, Sunday

My friend, Marnie Weeks, who earlier "discovered" the great ship Endeavor flying Star-Bulletin flags, responded quickly to the observations about the difficulties of finding a Star-Bulletin in Kona. "You just gotta look in the right places," she says, pointing to these racks
appearing near the lava flow along the Southern coast of the Big Island.

 

February 28, Monday 

Burl Burlingame, webmaster for Savestarbulletin.org, was inspired by the reports from Kona and called the circulation folks at Gannett's Hawaii Newspaper Agency.

HNA says the lineup of blue boxes at the Keauhou Shopping Center are NOT part of the stash of missing Star-Bulletin racks, appearances aside. According to HNA, these are racks that were purchased by a private owner and then painted the S-B's color.

Burl also learned that fewer than 200 Star-Bulletin's are delivered daily along the whole Kona coast, including the airport, the many hotels and shopping areas, supermarkets and home delivery combined. No wonder sightings are rare.

 

February 29, Tuesday

Leap year delivers another Y2K witching hour, the long anticipated 29th. So far no major computer problems sighted, so we dodge the bullet again. I wish we could get the same sense of release from the stress of the Star-Bulletin's delayed witching hour. The anxiety meter was popping again yesterday as more court deadlines approach. There isn't a lot of clarity about what, exactly, is supposed to happen or not happen by these deadlines, or what sort of settlement offers might be changing hands, which probably enhances the overall unsettling effects.

Meanwhile, I belatedly learned that the Hawaii County Council adopted a resolution introduced by Bobby Jean Leithead-Todd supporting the Star-Bulletin at their January 5 meeting. It is described in their minutes as follows: "Urges Liberty Newspapers to continue publication of the Honolulu Star-Bulletin and to actively seek a buyer to preserve two independent daily newspapers in the community. {Cease efforts to terminate the current joint operating agreement with the Honolulu Advertiser.}"

It passed on a 7-2 vote, with the votes of two absent members officially counted as "No". Mahalo to those council members who voted for a diversity of editorial opinions and local news sources.

 

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